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The Strategic Investments of Content Providers

Today’s news that Elsevier has acquired Plum Analytics from EBSCO provides the latest opportunity for insight into the remarkable evolution of the largest and most sophisticated academic content providers. From Elsevier and Springer to EBSCO and ProQuest, these publishers and content providers are reducing their reliance on their content businesses as engines of growth. While these businesses remain strong, they are pursuing one of two newer directions for greater growth. Aggregators like EBSCO and ProQuest are investing substantially in content support businesses, while scientific publishers are investing substantially in research management and analytics businesses. How and why they are making these investments tells us something about how they see the environment developing and offer indications of how libraries may wish to engage them most effectively.

The health of the content businesses

The “big deal” model of licensed content products has proved enormously profitable for the commercial scientific publishers and deeply problematic for academic libraries. The open access movement has sought to rebalance these dynamics, and political and organizational developments could yet unleash changes that would profoundly and negatively impact their business. Certainly, looking at other information businesses, such as journalism, there is reason for caution. To date, however, if publishers have not actually co-opted open access they have certainly found ways to coexist with “gold” or hybrid models in conjunction with their licensed content products. Overall, the academic content product businesses have continued to thrive in recent years.

Nevertheless, in assessing the risks, major academic publishers and content platforms have recognized that their businesses are mature and have taken a number of steps to diversify. Publishers’ evergreen content, the new issues they publish each year, is perhaps less subject to threat. Elsevier is perhaps the most successful traditional academic publisher, having used the transition to digital licensing and a stream of major acquisitions to offer a prominent journals bundle and achieve substantial pricing power for it. Even Elsevier’s stated vision, publicly articulated by its chairman YS Chi, is in part one of “reducing the share of its revenues coming from content.” While Elsevier is continuing to drive growth in licensing revenues to be sure, it is building other businesses at an even faster rate.

The strategic directions of content providers

Today’s news about Plum helps to clarify the directions that both EBSCO and Elsevier are heading. EBSCO and ProQuest alike are building up an impressive array of content support businesses, which are intended to be sold principally to libraries but are outside of the materials budget. Elsevier and Springer (through its related Digital Science businesses) are building portfolios in research management and analytics businesses, which are intended to be sold to universities (beyond the library budget altogether) and to scholars themselves. Now that Plum is in the hands of Elsevier, the delineation is even clearer than it was before.

Some of Elsevier’s new businesses in recent years include: building its Scopus discovery and analytics platform; buying and building research management and analytics businesses such as Pure, SciVal, CiteScore, and now Plum; and acquiring and expanding laboratory management, social networking, and open content products such as Hivebench, Mendeley, and SSRN. Even while it clearly remains in investment mode for these new businesses, Elsevier is already positioned as a foremost provider of laboratory management, researcher workflow, and research analytics for the higher education and scientific communities. One of the most interesting aspects of these new directions is that they are mutually reinforcing with Elsevier’s content businesses. This is an impressive strategic pivot.

EBSCO and ProQuest are pivoting with no less alacrity. In recent years, ProQuest has continued to bolster its core content platform with ebrary, EBL, MyiLibrary, and more recently Alexander Street Press, yielding a growing suite of licensed content products that support undergraduate teaching and learning. But of even greater importance have been the major investments in content support businesses, including Serials Solutions, Ex Libris, Coutts, and SIPX. These new businesses, which are believed to be collectively profitable, position ProQuest as the foremost provider of library management systems, with substantial strengths in acquisition, discovery, and permissions as well.

As for EBSCO, it also has continued to bolster its core content and now discovery platforms, acquiring HW Wilson and NetLibrary, among others, and creating the Ebsco Discovery Service (EDS), that seems to be at the heart of its vision. Beyond digital discovery and access, it acquired YBP, the book acquisitions service that has some similarities with EBSCO’s existing subscriptions service, positioning it to provide more seamless solutions across print and digital formats. And while it did not acquire Ex Libris when that company was available, EBSCO is investing in the creation of the FOLIO open source platform that may prove an alternative. It has also acquired Learning Express, positioning it even more solidly in the teaching and learning space. EBSCO seems especially thoughtful in identifying synergies across its products. While Plum offered some intriguing opportunities to add indications of trust and authority to the discovery service, ultimately the broader strategic case was apparently not there.

What this means for the academic library

Looking across the three companies, EBSCO, Elsevier, and ProQuest, we can see common patterns. These firms and their predecessors held very different positions 15 years ago, but today each has pivoted substantially to reduce its overall exposure to content licensing to academic libraries. It may be too early to know if these strategies will succeed in providing a new source of growth to substitute for licensed content products in the long term. But, it is notable that each has pursued a fundamentally similar strategy of adding businesses that do not rely on the library materials budget; in the case of EBSCO and ProQuest mostly in the library technology budget and in the case of Elsevier mostly outside the library altogether. In all cases, though, it is interesting to note that each is tying other products and services to its content businesses, or is positioned to do so down the road. This has substantial implications for how the library may wish to engage with these companies.

In the first place, it is good to see innovation that can benefit libraries and academia. New services have costs and also a price, and libraries that wish to provide new services will have to find the resources to acquire not only content but increasingly this variety of technology-enabled services.

Typically, academic libraries, at least, engage with these companies and many other vendors on a product by product basis. Sometimes those products are quite large; for many academic libraries, there is no product larger than Elsevier’s ScienceDirect. But increasingly, these companies are offering an array of products and services that will cut across traditional organizational boundaries, both within the library and more widely within the university. Collections themselves are changing, becoming technology-enabled and platform-dependent in many cases; this has already imposed new obligations in collection development, licensing, and integration. Now, as collections and services, both for the library and the scholar, become more richly interconnected, these library obligations are likely to grow only more complicated. There will over time arise organizational implications for the way many libraries today think separately about collections, technology, and services.

These new product configurations also position the library no longer as the only organization on campus to serve as counterparty to these vendors. While not in every case, in some cases, vendors appear to be using this new position to take a “divide and conquer” approach, pitting the library at least implicitly against other parts of the university. How will libraries position themselves to respond?

Finally, these developments raise risks around product bundling and conflicts of interest that will need to be addressed transparently over time. Whether or not you agree that Elsevier getting into the analytics businesses will represent a conflict of interest, it is worth remaining watchful about this set of business directions. Once it becomes clearer how EBSCO will integrate with YBP, and ProQuest with Ex Libris, there may arise concerns about conflicts or bundling as well. Libraries need to position themselves to consider these eventualities and voice opinions as needed.

Today’s news about Plum is a comparatively small step in a broader set of strategic directions for the most sophisticated content providers. They are continuously reviewing the landscape and making smart investments to ensure their ongoing growth. I expect to see more of these strategic investments in the coming year. The customers, counterparties, competitors, and partners of these companies have much to contemplate.

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Ithaka S+R is a not-for-profit service that helps the academic and cultural communities serve the public good and navigate economic, technological, and demographic change. We deliver strategic guidance, research, and publications through two program areas: Educational Transformation and Libraries & Scholarly Communication.